Aussie Dollar Plummets! Is It Time to Buy or Short?

The Australian dollar (AUDUSD) is in free-fall, and traders are left wondering—should they catch this falling knife or let it plunge further? The currency has tumbled from 0.6327 to 0.6253, a significant drop that raises concerns despite Australia's overall economic stability.  

A key factor influencing this decline is the latest Consumer Price Index (CPI) data, which came in lower than expected. The year-over-year inflation rate dropped to 2.4%, below the expected 2.5%, while the quarter-over-quarter figure remained unchanged at 0.2%. These numbers suggest cooling inflation, which could pave the way for interest rate cuts by the Reserve Bank of Australia (RBA).  

While the CPI data is relatively positive for the Australian economy, the Aussie dollar has continued to slide, making traders question whether now is the time to go long or short. Many traders, myself included, are eyeing the 0.61 level as a key target, with an potential extended take-profit level at 0.60.  

Meanwhile, USD/JPY has seen significant volatility following the Bank of Japan’s recent 25-basis-point hike, bringing rates to 0.5%. The yen initially fell before bouncing back, but ongoing uncertainty around China's economic outlook and broader market sentiment has fuelled another decline. If forward guidance from the Federal Reserve continues to favour a stronger dollar, USD/JPY could dip further, with a target range between 145 and 141.  

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